Women-Owned Firms Make Strides in Federal Contracting

The U.S. government is the world’s largest single purchaser of goods and services, offering a worthwhile market opportunity for many small businesses—including women-owned firms. The 5 percent federal goal for agency spending with women-owned firms, as well as the newly-launched Women-Owned Small Business (WOSB) Federal Contract Program in particular, can offer women-owned firms greater contracting opportunities.

A recent survey conducted among small business owners who are active federal contractors1 shows them to be working harder for less return than they were a year ago. A new report, Women and Minority Small Business Contractors: Divergent Paths to Equal Success, focuses on key trends among women- and minority-owned firms in federal contracting. This new report, published by American Express OPEN’s Victory in Procurement (VIP) program, finds that women business owners who are active contractors have reached the same level of contracting and overall business success as all active small contractors, with a similar level of effort—but they have not yet found that certification as a woman-owned small business (WOSB) has helped them achieve that success. Further, the pinch that all small firms are feeling over the past year with respect to fewer bidding opportunities and lower success rates have impacted women-owned firms even more severely than average.

Notable survey findings include:
 •Women-owned active contractors have achieved the same level of procurement and business success, with a similar level of effort, as all active small contractors. Over one-third (35 percent) of women active contractors have received $1 million or more in federal contracts over their lifetime of federal procurement activity, virtually identical to the 38 percent of all active contractors who have reached the same level of procurement success. In addition, 19 percent of women contractors employ 50 or more workers and 42 percent have $1 million or more in annual revenues, very similar to the 18 percent and 47 percent seen among all active small business contractors. Further, it took women business owners an average of 1.2 years and 4.0 unsuccessful bids to notch their very first victory in procurement, virtually the same as the 1.3 years and 4.4 bids seen among all small businesses.

 •Recent prime contracting bidding activity and success rates have declined for all small businesses, and even more significantly for women-owned firms. Over the past three years (2008-10) the level of bidding activity and the success rates for active small business contractors have declined compared to the 2007-09 period: prime contracting bidding activity is down 47 percent and prime bidding success rates are down 8 percent, and subcontracting bidding activity and success rates have declined 48 percent and 27 percent, respectively. The decline is even more severe among women business owners, especially with respect to prime contracting, where bidding activity has declined by 55 percent and success rates have fallen by 17 percent.

 •Women-owned firms are more likely than average to have a special procurement designation or certification. Getting on the GSA schedule has been most helpful, but being self-certified as a WOSB has not yet opened contracting doors. Self-certifications as well as qualified designations can increase procurement opportunities for many small firms. Over eight in 10 (82 percent) women-owned firms have one or more of these designations, compared to 70 percent of all active contractors. Women business owners are most likely to have self-certified as a WOSB (68 percent), gotten on the GSA schedule (24 percent) or qualified for small disadvantaged business/disadvantaged business enterprise (SDB/DBE) status (24 percent). Women business owners find being on the GSA schedule particularly helpful—41 percent of those who are on the schedule say it’s been very or extremely useful for getting federal contracts. Not so much the WOSB status—just over one-third (37 percent) of active women contractors who have self-certified as a woman-owned small business report that the designation has been useful to them, with only 17 percent saying that it’s been very or extremely useful. Of course, up until February 2011 there was no official government WOSB program, so the full impact of this program has yet to be seen.

Other key insights in the report include the finding that women business owners are much more likely than the average active small business contractor to point to agency purchasing officials and outside consultants as having had a positive impact on their contracting success.

This report is the second in a series of four reports that will be published from the second annual survey among active small business federal contractors. The first, Trends in Federal Contracting for Small Businesses, focused on the overall situation for small firms in the federal marketplace today as well as key trends seen over the past year. Other upcoming reports will focus on how strategies and outcomes change with level of procurement experience, and what lessons can be shared from firms that focus on subcontracting as a procurement strategy.

To download and read the entire 11-page report click here, and to learn more about American Express OPEN’s VIP program, visit www.openforum.com/governmentcontracting.

An active contractor is defined as a business that is registered on the Central Contractor Registry to do business with federal agencies and is either currently performing on a federal contract or has performed on a contract within the past five years.

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